KUALA LUMPUR: Malaysian palm oil futures ended the week 7% higher on Friday as the arrival of the monsoon season stoked production worries, although gains were capped by sluggish October exports.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange rose 4 ringgit, or 0.1%, to 4,100 ringgit ($865.71) a tonne.
Storms and a high risk of flooding during the year-end monsoon season, which typically lasts between October and January, are likely to disrupt harvesting activities and hurt production in the world’s second-largest palm producer.
The market is supported by expectations of a drop in production and a weak ringgit, while poor exports and weekend profit-taking would limit the upside, a Kuala Lumpur-based trader said.
Exports of Malaysian palm oil products for Oct. 1-20 fell between 4.3% and 8.4% from the same week in September, according to two cargo surveyors. Another firm, AmSpec Agri Malaysia, estimated exports rose 3.3%.
Palm oil prices are likely to strengthen further as excessive rain in key producing countries Indonesia and Malaysia curbs output, while demand increases for its use in food and biofuels, industry officials said.
In related oils, Dalian’s most active soyoil contract edged 0.1% higher, while its palm oil contract fell 0.2%. Soyoil prices on the Chicago Board of Trade were down 0.5%.
Talks on extending a July deal that resumed Ukraine Black Sea grain and fertilizer exports are not making much progress because Russian concerns are not being taken into proper account, Russia’s U.N. ambassador in Geneva said on Thursday.
Malaysia’s financial markets will be closed on Monday for the Diwali festival.